A bankruptcy judge overseeing Sears Holdings Corp.’s case rejected the company’s request to increase compensation for three advisers hired to recover money by filing lawsuits against the retailer’s vendors and other parties, WSJ Pro Bankruptcy reported. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said that he needs to see more information on why Sears needs to raise the advisers’ contingency fees to pursue claims against any third parties who received payment from Sears within three months before its bankruptcy filing. Sears hired law firms ASK LLP and Katten Muchin Rosenman LLP and financial adviser Stretto to pursue so-called preference lawsuits. While such lawsuits typically play a minor role in obtaining recoveries for creditors, they have become a critical avenue to potentially collect money in the Sears case, because the Sears bankruptcy case remains open more than two years after all of its stores and operations were sold, and more than a year after Judge Drain confirmed its restructuring plan, because there wasn’t enough money left to pay top-ranking creditors—including suppliers who sold merchandise to the retailer during the bankruptcy case.
